How safe are Direct Mutual Fund platforms to invest in?

A mutual fund is a professionally managed company that collects money from many investors and invests it in securities such as stocks, bonds and short-term debt, equity or bond funds and money market funds.

Mutual funds are a good investment for investors looking to diversify their portfolio. Instead of betting everything on one company or sector, a mutual fund invests in different stocks to try to minimize portfolio risk.

The term is typically used in the US, Canada and India, while similar structures around the world include the SICAV in Europe and the open-ended investment firm in the UK.

How safe are Direct Mutual Fund platforms to invest in?

There are many fintech companies that offer Direct Mutual Fund investment platforms for free or for a fee. Most of these platforms are registered with SEBI, therefore well regulated and governed by the security and privacy guidelines imposed by SEBI. Today, Fortune 500 companies can also be hacked, as can Mutual Fund platforms. However, it is highly unlikely.

Since most Direct platforms are currently owned by startups that haven’t existed for a long time, there may be a chance that some of them will close or be acquired by larger entities. But you should not worry about your investments made through these registered platforms even if they cease to exist in the future because the money invested by you goes into the mutual fund account and the Fund has a SEBI recognized Registrar to keep an account of your investments.

You can always approach the fund house to access your investments. Choose a direct platform if you like its user experience, the rates, the services it offers, and if the founding team inspires trust. Do not worry about its future and your investments made through them. They will always remain safe with the houses of the funds.

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